June 27, 2002
Dear Bernard:
I am pleased to offer you the position of Chief Executive Officer at Viisage
starting on or before Tuesday, September 3, 2002.
You will be an employee at will, with an annualized starting salary of $300,000
with twice monthly pay periods. You will have an annual target bonus of
$150,000. The bonus for the second half of 2002 will be based on achievement of
a set of mutually agreed objectives, which we will recommend to the Board of
Directors for their approval. The bonus for 2002 will be pro-rated based on your
actual time in position during the year.
In addition to your salary and bonus, Viisage will grant you non-qualified stock
options to purchase 720,000 shares of Viisage common stock. The strike price for
those shares will be equal to the market value on the date your offer letter is
signed and those shares will vest no later than your tenth anniversary of
employment. On the first working day of each calendar year, Viisage may
accelerate vesting on a portion of that 720,000 shares as follows:
     .    We will determine the peak market capitalization during the year based
          on the highest average market capitalization for Viisage common stock
          over 90 continuous days.
     .    The peak market capitalization of Viisage will be divided by one
          billion dollars. On January 1, 2003 we will calculate the ratio
          between peak market capitalization in 2002 and one billion dollars.
          That ratio will be called the "acceleration ratio". Viisage will
          accelerate vesting on a number of shares equal to the "acceleration
          ratio" times 720,000 shares. Those shares would then be accelerated
          and vested immediately. On January 1, 2004 and subsequent years, if
          the peak market capitalization is higher than in any previous years,
          then Viisage will accelerate options such that the total accelerated
          options divided by 720,000 is equivalent to the "acceleration ratio"
          for that year.
               .    For example: If the highest average market price in the year
                    2002 was $7.25 per share and we used 24 million shares as
                    the fully diluted number of shares, then the peak market
                    capitalization would be calculated as $174 million. If we
                    divide $174 million dollars by one billion, we get an
                    "acceleration ratio" of 17.4%. Therefore 17.4% of 720,000
                    shares is 125,300 shares, which would then become fully
     .    In addition you will participate in an Executive Stock Option Plan. On
          every January 1st and July 1st you will receive a stock option for
          30,000 shares of Viisage common stock priced at the closing market
          price on those days, vesting 50% in 24 months, and the remaining 50%
          in 36 months. The first stock option grant of 30,000 shares will not
          be pro-rated, even though you will have worked less than 6 months.
                       30 Porter Road, Littleton, MA 01460
                       Tel: 978-952-2200 Fax: 978-952-2290
     .    In the event of a change of control of the company, then the
          "acceleration ratio" would be recalculated based on the sale price of
          the company, or the highest average market capitalization for that
          year, whichever is higher. That "acceleration ratio" would be applied
          as if it was at the beginning of the year. In addition, any of the
          unvested semi-annual options will also immediately vest.
     .    In the event that you were achieving your management bonus objectives,
          as determined by the Board, and the company was sold at a price that
          would have provided you a vested stock option value of less than $1.5
          million dollars, Viisage will accelerate sufficient incremental
          options from your initial grant of 720,000 shares to provide you with
          a total option value of $1.5 million dollars.
Upon your start, we will pay you a signing bonus of $85,000 in consideration for
your lost bonus opportunity at ATG and to cover any expenses relating to
relocation of your personal residence other than temporary housing. We will
reimburse your reasonable out of pocket temporary housing expenses for up to 90
In the event the company were to terminate your employment without cause, then
the company would provide you with severance equal to your monthly base salary
plus medical benefits, paid on each pay period following your date of
termination for a period not to exceed 12 months from date of termination.
Should you begin employment elsewhere during that one year severance period,
then Viisage would have no continuing severance obligation if your gross salary
in the new position were greater than or equal to $25,000 per month. If the
salary in your new position were less than $25,000 a month, then Viisage would
continue severance payments equal to the difference between your actual monthly
salary and $25,000 a month, until the one year anniversary of your termination
Viisage can offer you four weeks of vacation, which is accrued on a prorated
basis each pay period. The company has a CEO benefits plan as attached. Also
attached is a confidentiality, non-compete, and non-solicitation agreement which
we will ask you to sign as a condition to this offer. Viisage will cover the
cost of either COBRA healthcare or its own company plan in such a way to ensure
that you will have no lapse of medical coverage subsequent to your scheduled
surgery next month.
This offer is contingent upon successful completion of a background check. To
formally accept our offer, please sign and date this offer letter and return to
me via fax at 978-952-2290. This offer is extended until close of business of
June 28, 2002.
Once we receive your verbal agreement on June 28, 2002, it will be binding and
that you would not consider offers or counter offers from any other companies,
so we can move quickly to start working together with you as our new CEO.
                       30 Porter Road, Littleton, MA 01460
                      Tel: 978-952-2200 Fax: 978-952-2290
Bernard, we are excited about having you take the helm of the company and lead
it through what we believe will be a very exciting period of growth. We look
forward to having you join our team.
/s/ Denis Berube
Denis Berube
Chairman of the Board
/s/ Bernard Bailey                                                 29 Jun 02
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Bernard Bailey - Acceptance Signature                              Date
                       30 Porter Road, Littleton, MA 01460
                       Tel: 978-952-2200 Fax: 978-952-2290